What is SEC Form ADV?

To comply with the Securities and Exchange Commission (SEC), professional investment advisers must file Form ADV. This document outlines an advisory firm’s investing approach, AUM, and important officials. Companies managing money above $25 million must update this form annually and make it public.

SEC Form ADV has multiple sections. In the first part of SEC Form ADV, advisers must disclose prior disciplinary action. The second section covers the firm’s AUM, investing strategy, fees, and services.

Understanding SEC Form ADV

Who Can Submit SEC Form ADV?

The SEC and state securities regulators need SEC document ADV, the Uniform Application for Investment Adviser Registration, and a Report by Exempt Reporting Adviser.

The North American Securities Administrators Association (NASA) accepts document revisions with cooperation from the Financial Industry Regulatory Authority (FINRA).

Prospective and current investment advisor clients should consult the SEC document ADV. This is because it shows the firm’s asset mix and critical personnel’s professional backgrounds.

Most advisers provide a current SEC document ADV to potential clients early in marketing. Investors should be wary if an adviser doesn’t give the paperwork upon request.

How to File SEC Form ADV

As said, this form has numerous elements. Below, we’ve highlighted crucial facts from each.

Part 1

ADV begins with a fill-in-the-blank section that may be easier for the adviser to complete:

• Business of the adviser
• Ownership and breakdown
• Any ties
• All related business procedures
• Current and past clients
• Information about crucial and other workers
• Discipline by the advising firm or its employees

The SEC processes registrations and runs regulatory and examination programs using firm information from this section.

Part 2

The investment adviser writes the second portion of the form. Write this in clear English and include information on the advisory services, fee structure, disciplinary information, and any conflicts of interest. This section may disclose whether directors have outside commercial interests that might influence their decisions or reveal inside knowledge.

This section should contain managerial background, education, and business experience. Key advisory personnel should have biographies, too. Investment advisers provide this portion as the principal disclosure document to customers. The public can always view field brochures.

ADV Part 2 must contain a supplement with information about key personnel who actively advise customers on investments.

Annual ADV updates

All financial advisers must update their brochures annually. This comprises all significant firm changes and critical business information and activities.2

SEC Form CRS

SEC document ADV historically had Part 3, a summary of the prior parts. The relationship summary was its name. The SEC changed the form in June 2019 and split the third component into SEC Form CRS, the Relationship Summary.

The form is intended to “deliver to retail investors a brief customer or client relationship summary that provides information about the firm.”Every retail investment services business must file it with the SEC and send it to customers.

SEC Form CRS summarizes SEC document ADV. Advisors must include the following:

• Identifying data
• Provided services
• Client relationships
• Fees
• Conflicts of interest
• Conduct standards
• Corrective action
• Additional info

The form must be brief and written in clear English for clarity.

Accessing SEC Form ADV

Contact your local SEC branch for ADV. Customers of investment advisers should study Form ADV for open information about the firm’s asset mix and critical personnel’s backgrounds.

SEC Form ADV download

Click here to get the SEC Form ADV.

How do I find a firm’s SEC Form ADV?

The SEC Form ADV that companies submit to regulators must be public. They are freely accessible on the Securities and Exchange Commission’s Investment Advisor Public Disclosure page. You may also ask the company directly. Remember that all investment businesses must give new and current customers this paperwork.

Do brokers and dealers file SEC Form ADV?

Yes. SEC document ADV is required for investment advisors. This covers investing businesses and advisors. The Securities and Exchange Commission and state securities agencies need it as a registration form.

SEC Form ADV Parts 1 and 2?

SEC document ADV Part 1 identifies the submitting firm. It covers information about the firm, its services, owners, clientele, business relationships, and prior disciplinary proceedings. The fill-in-the-blank or check-box style makes this area accessible to complete.

What are SEC Form ADV Parts 2A and 2B?

Part 2 of the SEC document ADV is a company brochure. It discloses the company’s business methods, fees, conflicts of interest, and prior discipline.

There are two parts to this section. Part 2A is the brochure’s cover page with identifying information, while Part 2b is the supplement. Write the details clearly in basic English for easy comprehension.

What is SEC Document ADV Part 3?

This is the relationship summary. In June 2019, the SEC modified SEC Form ADV and separated Part 3 into SEC Form CRS. Any organization offering retail investing services must complete this form. A summary of both portions of SEC Form ADV must include identifying information, client connections, services presented, and conflicts of interest.

Bottom Line

SEC document ADV is one of several files investment advisors and businesses must complete to be compliant. This information can help investors choose or modify their investment team. Firms should offer brief, primary English material that everyone can understand. Remember to enter the correct details. Misleading information can lead to registration revocation, penalties, and prosecution.

Conclusion

• The SEC requires professional investment advisers to submit ADV documents.
• The SEC and state securities regulators require ADV documents for registration.
• SEC document ADV must include identifying information, assets under management, and investment fee structures.
• SEC document ADV discloses the firm’s asset mix and staff credentials.
• The new SEC Form CRS replaces Part 3 of SEC Form ADV.